Recognising that traditional energy policy tools have not achieved the magnitude of carbon savings needed to meet climate stabilization targets, a few new innovative instruments are being introduced or planned in a number of countries. Among them are the so-called ‘white certificates’, a cap-and-trade scheme (or, in some cases, an obligation without the trading element) applied to achieve energy efficiency improvements. The basic principle is an obligation for some category of economic actors (e.g., utility companies, product manufacturers or distributors and large consumers) to meet specified energy savings or programme-delivery goals, potentially coupled with a trading system based on verified and certified savings achieved (or expected) for energy-efficiency measures (the ‘white’ certificate) (ECEEE, 2004; Oikonomou et al., 2004). Energy efficiency obligation programmes without certificate trading have been operating in the UK since 1994 and in Flanders (Belgium) since 2003; white certificate schemes with a trading element were in place in 2006 in Italy, France and New South Wales. Other European countries have announced their intention to introduce similar schemes.

Capturing the desired benefit of certificate trading schemes – that is minimising the costs of meeting energy savings goals – depends on the liquidity of the market. There is a trade-off between liquidity, crucial to minimizing the costs, and manageability and transaction costs. Where transaction costs turn out to be very high, a simple energy savings obligation for electricity and gas distributors, without the complication of trading, may be a better way to deliver the desired outcome (Bertoldi and Rezessy, 2006). Since the first white certificate schemes are just starting, it remains to be seen whether this policy instrument will deliver the expected level of savings and at what cost.

In the UK, the Energy Efficiency Commitment (EEC) requires that all large gas and electricity suppliers deliver a certain quantity of energy savings by assisting customers to take energy-efficiency actions in their homes. The delivered overall savings of the first phase, 87 TWh, largely exceeded the target of 65 TWh and the target has since been increased to 130.2 TWh (Lees, 2006).